TelstraSuper and Equip Super have signed a non-binding memorandum of understanding and have agreed to explore a “merger of equals” between the two funds.
The merger would create a combined fund with some $60 billion in funds under management and more than 225,000 members.
Pending the outcomes of due diligence, it is expected that the merger will be executed via a successor fund transfer late next year, the funds confirmed on Wednesday in a joint statement.
According to the duo, the deal would achieve significant scale benefits and deliver improved retirement outcomes for members.
“Both funds have a proud history in serving the superannuation needs of a wide range of members including the employees of large companies,” TelstraSuper chair Anne-Marie O’Loghlin said.
“Over time we have both grown to support a broad and diverse membership. We are excited about the potential benefits that come from a merger and the opportunity to create a larger fund continuing the focus on providing industry leading superannuation, retirement and financial planning solutions for members.”
The agreement also follows a comprehensive review of potential merger partners undertaken by the board of TelstraSuper throughout the year.
In a recent update, TelstraSuper said it had received a “high level of interest” from funds seeking to partner.
“After considering a range of options, Equip Super was chosen as an ideal merger partner as their strengths complement those of TelstraSuper’s,” the funds said on Wednesday.
“TelstraSuper is a highly regarded fund that brings complementary capability and the scale required to deliver tangible benefits for members,” Michael Cameron, chair of Equip, said.
“With similar heritages in corporate superannuation arrangements, shared values, and a common focus on retirement solutions and advice, we are excited by the opportunities this merger presents for Equip Super’s members and employers.”
Expounding on the decision behind the merger, TelstraSuper and Equip said that each will be able to leverage their combined strengths in member and employer servicing, investments, and tailored corporate arrangements, including defined benefit plan.
“The merged fund will retain strong connections to its heritage industries and connected communities, particularly telecommunications, entertainment, energy, mining, healthcare and education,” it said.
The two funds will now undertake further due diligence including confirming the initial view that the merger is in the best financial interests of members of each fund.
In the meantime, TelstraSuper and Equip will continue to operate independently.
